2 comments:

The link doesn't work; the blog seems to be down. But I'll respond here from what I remember.

3.5% inflation is supposed to vindicate people who have been predicting imminent hyperinflation for the past 3 years? Puh-lease! Moreover, a lot of supporters of quantitative easing consider abnormally high inflation a feature, not a bug. It's not like they didn't predict quantitative easing would be inflationary, because they wanted it to be inflationary.

I advocated quantitative easing, despite many reservations, but I always predicted it would cause abnormally high inflation. A housing bubble and at least 2 years of tight money will tend to suppress production, not to mention the unusually high gas prices. What is important is that aggregate and per capita nominal income are relatively stagnating. Inflation doesn't appear to be driven by quantitative easing.